Beauty, Mercy, Justice

Reminder – Thomas Storck at Econ. Conference

April 4 at Nassau Community College (NY). Tom will be speaking for distributism alongside (against?) defenders of democratic socialism (Dr. Charles M.A. Clark) and democratic capitalism (Michael Novak). It should be quite an interesting evening. As readers of this blog are aware, Tom really knows this stuff. See the link for more specific info.

Thanks to all of you for your prayers and words of support. I was more than satisfied with the conference. I haven’t found out if the video of it will be made public – all the participants have to sign a release form for this to happen – but if it is I’ll tell everyone where it can be found and let each person make his own judgment.

But a few remarks. Dr. Clark, as I suspected, is not really a socialist, but a social democrat and a firm Catholic. I agreed entirely with his critique of capitalism, and he agreed with all or nearly all that I said. So it was Novak against whom we both were arrayed. His basic tack was to mitigate capitalism and try to make it seem as if there were no big differences between the speakers. For example, Novak said that labor unions are a necessary part of a capitalist economy, even though he closely associates with those (e.g. the Acton Institute) who regard labor unions as distorters of market forces.

I found the following at extremecatholic.blogspot.com
The poster is a capitalist, as he says, but I think some of his responses to the debate were good. He makes mention of one thing I said, which concerned corporations and their limited liability. But especially I’m pleased with his resolve to read all the papal social encyclicals.

Sunday, April 05, 2009

Catholicism and Economics
At the Nassau Community College, Center for Catholic Studies

It was not capitalism’s day to shine. It’s wasn’t a classic debate along the lines of “Resolved: The United States should abandon capitalism for socialism.” or “Resolved: The United States should abandon capitalism for distributism” it was more like put the texts of An Inquiry into the Nature and Causes of the Wealth of Nations through Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse into a pinata and beat it around.

Really, there were so many lies and half-truths said about the “c” word, there would be scarcely any time to offer up criticism on socialism and distributism.

Michael Novak, I think, fell into several traps, citing government interventions into political matters as favorable evidence for capitalism. I thought citing the provision for patents and copyrights in the Constitution as a very odd way of defending capitalism — an example of how the government grants a limited monopoly. Rather, it demonstrates that government often intervenes into markets.

Rather than convincing me to stop being a capitalist, I heard many familiar complaints which I could have answered like “capitalism necessarily increases income inequality”, but I also heard a few that made me think about things: how different the country would be if it were not so easy to create limited liability corporations.

The lasting impact on me was a resolution to reread Rerum Novarum (1891) and its sequels through Centesimus Annus (1991) to get a better sense of how they connect to Catholic social justice.

Finally, if they do this again, it should include someone who can argue for more capitalism — that the Louisiana Purchase was unconstitutional because it was not an enumerated power, and that “commerce clause” cases all the way back to Gibbons v. Ogden were decided in contravention of the principles of capitalism. Don’t stop with unwinding creeping socialism in FDR’s new deal, let’s unwind all the way back to George Washington.

What do you think about the free market under the rule of law?
You condemn capitalism like most Austrian economists would do. But… What do you think about the free market under the rule of law. The Catechism of the Catholic Church and many papal encyclicals seem to be highly in favor of that system.

I have been reading the Papal encyclicals and the Catechism and have become a supporter of the Austrian school for both its moral and practical reasoning.

Dan Henson
(If you could leave an e-mail address or contact information it would be much appreciated)

[NOTE: I’m posting this comment on behalf of Thomas Storck, who is having trouble getting comments to appear. The comment from Mr. Henson is actually not out of place–if you post a comment by clicking on the “reply” button in the title line of a specific comment (beside the date/time), the new comment will appear immediately after that one, in forum-style sequence. Unfortunately some italicization and other formatting was lost when I pasted Tom’s text here, and I don’t have time to replicate it.
–Maclin Horton ]

Mr. Henson’s e-mail above seems to have gotten displaced in the lineup.

Mr. Henson asked, “What do you think about the free market under the rule of law?”

If by “free market” you mean an economy in which all or most economic decisions are (supposedly) made by the free play of economic forces, e.g., demand and supply, then I reject such a system as does the Church. Despite isolated passages in Centesimus, the encyclical as a whole clearly indicates that the market does not automatically work toward the common good and that the market must be controlled. I dealt with this at length in the following article, http://www.distributist.blogspot.com/2009/01/what-does-centesimus-annus-really-teach.html

Earlier papal teaching on this was very clear. Here is a (long) passage from Pius XI’s Quadragesimo Anno – emphasis my own.

“88. Attention must be given also to another matter that is closely connected with the foregoing. Just as the unity of human society cannot be founded on an opposition of classes, so also the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life – a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle. This function is one that the economic dictatorship which has recently displaced free competition can still less perform, since it is a headstrong power and a violent energy that, to benefit people, needs to be strongly curbed and wisely ruled. But it cannot curb and rule itself. Loftier and nobler principles – social justice and social charity – must, therefore, be sought whereby this dictatorship may be governed firmly and fully. Hence, the institutions themselves of peoples and, particularly those of all social life, ought to be penetrated with this justice, and it is most necessary that it be truly effective, that is, establish a juridical and social order which will, as it were, give form and shape to all economic life. Social charity, moreover, ought to be as the soul of this order, an order which public authority ought to be ever ready effectively to protect and defend. It will be able to do this the more easily as it rids itself of those burdens which, as We have stated above, are not properly its own.”

Above I said that with a free market the economy is “supposedly” regulated by economic forces, for in fact I think it is chiefly power and institutions which rule in an economy. Not that economic forces do not exist, but that they exist and operate in a context of being manipulated by those with power and working according to cultural and legal institutions which differ widely according to place and time.

Most Austrians I’ve come into contact with regard their economic conclusions as superior to the teaching of the social encyclicals (e.g. Thomas Woods). I see no reason why that’s not plain old dissent and perhaps heresy, in fact the “social modernism” that Pius XI complained about in his first encyclical, and which he said he deplored as much as he did dogmatic modernism.

The techniques of Austrian economics, i.e., the Austrian understanding of the market as opposed to the neoclassical school – well, my knowledge of the latter is greater, but it doesn’t seem to me that the Austrian school is fundamentally different. I think that Institutional economics – that is, the original Institutionalist school – provides the best explanation for how an economy really operates.

I have an article coming out in the fall Catholic Social Sciences Review in which I argue that papal social teaching assumes that it is power and institutions which are the chief determinants of economic outcomes, and that therefore papal teaching implicitly rejects both neoclassical and Austrian economics.

I think if you send an e-mail to the site administrator, he will forward it to me and I’ll respond to you that way. OK?

Very cool Mr. Elliot. I’m starved for missives from the mailbox. I’ll admit it, I even open junk mail. (Hey, maybe it’s a check with a lot of zeros at the end.) Such a sad existence for me when my a single a small rush of importance is ripping open junk mail. Bills can wait, so a real letter sounds excellent. Will subscribe.Cheers, Iris